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Stepping up corporate accountability

Reconciling corporate interests with human rights is a difficult endeavour. A research project funded by the Austrian Science Fund FWF demonstrates that non-judicial complaint mechanisms may be an adequate avenue for conflict resolution.

Companies face increased pressure when it comes to human rights violations as is the case, for example, in the global textile industry. Non-judicial complaint mechanisms may be an adequate avenue for conflict resolution. Quelle: Shutterstock, Inc.

For a number of years, companies have been facing increased pressure when it comes to human rights violations. Numerous multinational corporations such as Shell Oil, Texaco or Unocal were accused of such violations, resulting in years of legal disputes and public campaigns harming their reputation. “Balancing human rights and corporate interests can often be problematic”, explains Claudia Sprenger in the interview with scilog. She was part of a team led by principal investigator Karin Lukas from the Ludwig Boltzmann Institute for Human Rights, together with Barbara Linder and Astrid Kutrzeba, which conducted a three-year research project funded by the FWF to explore what strategies might best be used for conflict resolution where human rights violations occur in a business environment.

The researchers from Vienna focused on non-judicial complaint mechanisms. Unlike states, which are subjects of international law, corporations are not subjected to legally binding international instruments, but they are bound by national laws. “It’s rare for cases to make it to the courtroom, and if they do the proceedings are usually lengthy, complex and don’t lead to satisfactory outcomes”, underlines Karin Lukas, a human rights expert.

UN Guiding Principles and case analyses

Currently, several initiatives at global level have been endeavouring to create standards for responsibilities transnational enterprises must assume in respect of human rights. In 2011, the United Nations Human Rights Council unanimously endorsed the Guiding Principles on Business and Human Rights developed within the Protect, Respect, Remedy framework. Following comprehensive case analyses and interviews with experts as well as people responsible for this issue in the business world, the team from the Ludwig Boltzmann Institute has identified important indicators for sustainably translating recommendations such as the UN Guiding Principles into the reality of business life. In order to do that, the researchers reviewed the settlement of real-life complaints, vetting them for their strength and weaknesses, both on the part of corporations such as Adidas and Hewlett Packard and of multi-stakeholder bodies and international institutions such as the World Bank and the OECD.

Trust and co-operation

One of these multi-stakeholder bodies is the well-known Fair Wear Foundation, an organisation composed of companies, NGOs and trade unions, which champions equitable working conditions in garment factories worldwide. “The strength of organisations such as Fair Wear resides in the fact that they have people in the field who speak the local language and can establish a relationship of trust with the people concerned”, says Claudia Sprenger. Such initiatives are often more effective than those taken by international organisations or corporations, because they bring together many players. In order to address the root causes of problems, such as the particularly difficult issue of monitoring supply chains, additional elements are required: apart from building trust, more co-operation among all stakeholders and additional initiatives and follow-up measures would be required, notes Sprenger in her summary of the project results.

Even though non-judicial resolution mechanisms are slow in gaining ground, companies are increasingly aware of their responsibility in the global play of forces between the interests of the local population, policy-makers and business partners. In 2014, Adidas set up the Third Party Complaint Process for breaches to the Adidas Group Workplace Standards or violations of international human rights norms, to quote just one example of a corporate effort to safeguard human rights.

New recommendations for good practice

The results of the FWF project confirm that the resolution criteria laid down in the UN Guiding Principles on Business and Human Rights are actually effective. The experts from the Ludwig Boltzmann Institute also identified a number of other so-called “excellence criteria”. Complaint mechanisms should address the underlying structural problems and not merely fight the symptoms. “Problems are often similar in nature, such as people not being able to choose which trade union they want to join”, Sprenger observes from her practical experience. Companies should seek to establish a dialogue with stakeholders and engage mediators. Furthermore, the mechanisms should be transparent and independent and take local contexts into account. The chosen resolution routes should be geared to international standards and not just offer financial compensation. According to the project team, a successful mechanism is characterised by the involvement of all stakeholders in the negotiations and a fair and equitable negotiating process. “Implementation of what has been agreed on is a great challenge. Some of the mechanisms we investigated did prove successful in doing that”, says Lukas.

In their book Corporate Accountability, the researchers set out their findings with a view to facilitating the balancing of corporate interests and human rights in the future. The book includes the outcomes of the FWF project, all case analyses and the resulting recommendations.

Personal details

Karin Lukas is a senior researcher and team leader of the human rights in development cooperation and business team at the Ludwig Boltzmann Institute for Human Rights in Vienna. Her research focus is on human rights and business, women’s rights and development co-operation. She is a member of numerous international bodies and also works as a policy advisor.

Claudia Sprenger is a senior researcher at the Ludwig Boltzmann Institute for Human Rights in Vienna. Her specialisations are development co-operation, the rights of persons with disabilities as well as human rights and business.